Orlando Lacks Power To Issue Bonds For Ouc, Lawyer Advises

The Orlando Utilities Commission crossed the city off its list of possible ways to get $950 million in bonds issued after its bond counsel warned that lengthy litigation could result.

OUC officials said the bond money would allow the utility to refinance its $830 million debt at a lower interest rate. Refinancing could save customers between $50 million and $150 million, depending on the interest rates, officials say.

More than a dozen customers, however, blocked OUC's attempt in April to validate the bond proposal in circuit court -- a step considered necessary in selling the revenue notes. Most said they feared it would lead to higher rates.

OUC has appealed to the Florida Supreme Court. Utility officials worry, however, that the delay could prevent it from taking advantage of favorable interest rates, said Dick Brown, OUC financial director.

To speed up the process, Orlando Mayor Bill Frederick had suggested OUC turn to the city for help. Frederick also sits on the city-owned utility board.

But OUC's bond counsel, Mudge Rose of New York, said the utility's autonomy makes it doubtful Orlando can issue the bonds.

In previous suits, OUC has asserted that its state charter made it independent of local control.

If OUC fails to win its Supreme Court case, the utility may ask Orange County legislators to propose amendments to its state charter that would give it more powers to incur debt. Their support is necessary in getting legislative approval.

Carolyn Thomas, a local bond counsel for OUC, said utility officials had decided against asking for a charter amendment this year because they felt it would take longer than an appeal.

Gaines said OUC can expect proposed charter amendments from consumer groups if it ''opens the door'' for changes.

Gaines, as a member of the citizens advocacy group Power Now, had urged the delegation in 1983 to support amendments to OUC's charter that would require more public hearings on utility spending and an elected OUC board. The five-member board is appointed by the Orlando City Council.

The Orange County League of Women Voters has proposed requiring the OUC board to be nominated by a citizen advisory board and to include representatives of customers who live outside city limits.

The 10-member bipartisan delegation rejected the Power Now proposals but has not publicly reacted to proposals from the league.